Two More Activist Funds Build Stakes in ADP--Update
15 Maio 2018 - 7:04PM
Dow Jones News
By Cara Lombardo and David Benoit
Two activist hedge funds have built small stakes in Automatic
Data Processing Inc., adding pressure to the payroll-processing
firm as it tries to jump-start growth.
The two investors, D.E. Shaw Group and Sachem Head Capital
Management, haven't decided whether they would try to push for
changes at the company, according to people familiar with the
matter, but they have met separately with ADP's management and are
closely tracking its performance. ADP earlier this month increased
its revenue forecast for its fiscal year, which ends June 30, and
its shares are up about 8% so far this year.
The Wall Street Journal had reported Tuesday afternoon that the
firms had built stakes. Both disclosed in filings after markets
closed Tuesday that they owned about 0.4% stakes as of the end of
March, worth around $250 million. The quarterly filings are
required for large money managers, but don't include
derivatives.
D.E. Shaw and Sachem Head, which aren't working together, built
their ADP stakes ahead of a key meeting for the company next month.
The Roseland, N.J., company plans to hold an analyst day in
mid-June, where it is expected to detail its plans for new
growth.
The two investment firms join William Ackman, another activist
investor, as investors in ADP. Last year, Mr. Ackman's Pershing
Square Capital Management LP, which owns about 7.2% of ADP,
including derivatives, lost a proxy fight by a wide margin for
three ADP board seats. Mr. Ackman had argued the company fell
behind technology-focused startups and needed to improve its
margins, which ADP insisted it was already doing.
ADP is Pershing Square's largest investment. Mr. Ackman and
Pershing Square analyst Charles Korn said on Pershing Square's
earnings call Tuesday that ADP accelerated its bookings and did a
better job retaining business in its latest quarter and stands to
benefit from the tax-law overhaul, an accounting rule change and
rising interest rates. Pershing Square bought the ADP stock about
10 months ago at an average cost of about $104, Mr. Ackman said.
Shares have risen 22%, closing Tuesday at $127.08.
Shares of ADP closed up 0.3% to $127.07 after The Wall Street
Journal first reported the new investors Tuesday.
Other activist hedge funds also have looked at ADP recently, as
some believe Pershing Square had the right ideas but misstepped in
the proxy fight, the people said, but those funds so far haven't
gotten involved.
Sachem Head was founded by Scott Ferguson, who previously worked
at Pershing Square. D.E. Shaw, which has historically focused on
computer-driven quantitative trading, has only recently started to
dabble in activism. Earlier this year, it shook up the board at
Lowe's Cos.
Write to Cara Lombardo at cara.lombardo@wsj.com and David Benoit
at david.benoit@wsj.com
(END) Dow Jones Newswires
May 15, 2018 17:49 ET (21:49 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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